COVID-19 and pensions schemes – don’t fall into the communications vacuum

Date posted: 23/04/2020. Author: James Pryor

All schemes must now be online Regulations came into force in April 2018 meaning that DC and hybrid schemes had to publish certain information on disclosure and costs as part of the Chair’s Statement. This information must be published online and be readily available without having to log into a secured website. Further legislation is coming into effect from 1 October 2020 that require most DB schemes to publish their Statement of Investment Principles online, with further disclosure requirements due next year.

We are currently all going through an unprecedented experience with COVID-19, with it having an effect on pretty much all aspects of life.

The pandemic is, of course, also having a real impact on investments, which in turn is causing uncertainty and anxiety amongst pension members. As a trustee or employer, you have a duty to ensure your members don’t make any hasty decisions as a result of the current market volatility – such as opting out all together from the scheme.

This is where communications can really come into their own. 

We have seen in the past companies and pension schemes falling foul of what we call the ‘communications vacuum’. By this we mean not communicating anything to members in a time of change or crisis – thus leading to rumours and incorrect assumptions. 

Tata Steel, as highlighted in the 2019 Rookes Review, are one such scheme who fell into this trap when they didn’t act quickly enough in communicating major changes to the scheme’s structure. The communications vacuum that was created as a result led to members taking matters into their own hands and setting up groups on social media to discuss the situation. Whilst the intention of these members was commendable – it did lead to misinformation spreading throughout the scheme membership. 

What we can learn from this is, at times of great uncertainty, it is important to keep members informed of what is happening, even if there’s not much to say. 

Take COVID-19 for example, there are a lot of unknowns at present but just letting your scheme members know that you’re maintaining a watching brief, and that you have contingency plans in place, is a much better approach than doing nothing at all, and will help to reduce misinformation being spread.

In essence, reassurance is an update in and of itself. 

But what are the best ways to communicate to your members about COVID-19 and the impact it’s having on their pension? 

We recommend updating your membership through updates to a website. Websites are a great way of communicating information of this kind, because it means that members have a place they become familiar with to visit and see updated information as the situation changes.  Conversely, you are in a position to make updates to the website at speed when you have new information you wish to communicate. 

But not every scheme has a website, or the budget to set one up. This is where we can help.  Sparks have produced a simple, cost effective one-page website called ‘My Pension and Coronavirus’, that you can set up for your scheme, which allows you to post quick and simple updates to keep your membership informed. 

Having a website in place can help save you time and resources. By offering FAQs, which will reduce the need for members to call through to the scheme administration – meaning resources can be deployed elsewhere. Equally, offering reassuring messages on a website will reduce the risk of your members making the wrong decision which will potentially have a disastrous impact on their future retirement.

Our website solution has the flexibility of being re-purposed later down the line, allowing you to use it for other reasons – for example posting scheme documentation such as the Statement of Investment Principles – a disclosure requirement for DB schemes this October. 

Please get in touch today for a chat to see how we can help you and your scheme avoid the communications vacuum. 

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